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Appeals Court of Massachusetts.



Decided: November 29, 2021

By the Court (Massing, Lemire & Hand, JJ.2)


The plaintiff, Point Insurance, Inc. (Point), appeals from a Superior Court judgment that, in effect, affirmed the decision of the Division of Insurance (DOI) denying Point's complaint for relief from certain practices of Arbella Protection Insurance Company, Inc. (Arbella). Point contends that Arbella's treatment of Point's customers who were seeking renewal of their commercial insurance policies in the residual market violated the rules of Commonwealth Automobile Reinsurers (CAR), and that CAR and DOI (collectively, agencies) followed unlawful procedures and denied Point due process in adjudicating Point's complaint. In a thoughtful and comprehensive memorandum of decision on the parties' cross motions for judgment on the pleadings, a Superior Court judge ruled in favor of the defendants. We affirm.

1. Standard of review. We review DOI's decision under the familiar standards for review of administrative agency decisions. See G. L. c. 30A, § 14; Trust Ins. Co. v. Commissioner of Ins. (No. 2), 48 Mass. App. Ct. 628, 631 (2000). DOI's decision may be set aside or modified if it is “[i]n violation of constitutional provisions,” “[b]ased upon an error of law,” “[m]ade upon unlawful procedure,” “[u]nsupported by substantial evidence,” or “[a]rbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law.” G. L. c. 30A, § 14 (7). Our review is based solely on the administrative record. See Commercial Wharf E. Condominium Ass'n v. Department of Envtl. Protection, 99 Mass. App. Ct. 834, 840 (2021). “[W]e are required to ‘give due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it.’ ” Attorney Gen. v. Commissioner of Ins., 450 Mass. 311, 318 (2008), quoting G. L. c. 30A, § 14. By contrast, “[t]he conclusions of the Superior Court judge carry no special weight in our deliberations, although they will, of course, be considered.” Commercial Wharf E. Condominium Ass'n, supra, quoting Smith College v. Massachusetts Comm'n Against Discrimination, 376 Mass. 221, 224 (1978).

2. Point's procedural rights. To address Point's contention that the defendant agencies followed unlawful procedures and violated its due process rights, we briefly summarize the administrative proceedings. Point first filed a complaint with DOI under G. L. c. 175, § 113H (E), ninth par., alleging that Arbella was engaging in “unfair, unreasonable or improper practices” and asking DOI to order Arbella to stop those practices.3 Specifically, Point alleged that “Arbella has engaged in unlawful conduct improperly targeting Point and its customers by imposing requirements for Point's customers to obtain or renew insurance that it does not impose on other agents and their customers.” DOI determined that the complaint should be addressed by CAR in the first instance because Point's claims concerned the application of CAR's rules, and because CAR had previously adjudicated Arbella's termination of Point's predecessor, Rapo & Jepsen Insurance Services, Inc. (Rapo & Jepsen).

Thereafter, as directed by DOI, Point petitioned CAR for review of its claims against Arbella. CAR's market review committee held a hearing and carefully reviewed the ten practices by Arbella that Point alleged to be unfair, unreasonable, or improper. The market review committee determined that Arbella's practices were not unfair or unreasonable and did not violate CAR's rules. Point first appealed to CAR's governing committee review panel (review panel), which affirmed the market review committee's decision, and then to DOI, which affirmed CAR's decisions in a detailed decision.

The foregoing description of the administrative proceedings belies Point's contention that DOI or CAR violated Point's fundamental due process rights to notice and a meaningful opportunity to be heard. See Matter of Angela, 445 Mass. 55, 62 (2005). As Point itself initiated the proceedings, it clearly had notice of the issues before the agencies. In providing Point with four separate hearings, which Point does not contend were procedurally deficient, DOI and CAR amply observed Point's right to be heard.

Point also argues that the agencies followed unlawful procedure by failing to issue “standards” or “guidance” concerning eligibility for commercial coverage and the content of renewal applications during the adjudication of Point's complaint against Arbella. This contention does not survive scrutiny.

As an initial matter, Point misreads the record in arguing that CAR had a legal obligation to issue new standards. In a footnote in its initial decision referring the matter to CAR, DOI stated, “In the interest of ensuring a consistent regulatory approach to those activities, CAR is the appropriate forum” (emphasis added). “[T]hose activities,” to which DOI referred, were not Arbella's practices of which Point complained. Rather, “those activities” referred to “activities of the previous owner of what is now Point with respect to this particular book of business.” The previous owner, Rapo & Jepsen, had “us[ed] its commercial appointment to write insurance on vehicles that were not being used for commercial purposes” and had created “sham corporations and trusts for people who were not in business․” This conduct caused Arbella to terminate Rapo & Jepsen as an exclusive representative producer (exclusive producer), an action that CAR upheld. In other words, DOI deemed CAR the appropriate forum because CAR had experience dealing with the fraudulent writing of commercial policies. The footnote was not, as Point contends, a directive to CAR to issue standards.

The lack of such a directive from DOI to CAR is not surprising. Point's request for CAR to issue “standards” was not included in its initial petition to DOI, or in its complaint to CAR. Rather, Point first requested the promulgation of standards in its appeal of the market review committee's decision to the review panel -- as alternative relief, “to the extent the [review panel] affirms the decision of the [m]arket [r]eview [c]ommittee.” Moreover, even if Point had requested new standards from the start, DOI and CAR had no obligation to promulgate standards in proceedings initiated under G. L. c. 175, § 113H (E), ninth par. See Hanover Ins. Co. v. Commissioner of Ins., 443 Mass. 47, 50 (2004).

Equally misconceived is Point's related assertion that it could not be “held to certain standards” when it had no notice of what those standards were. The fundamental failure of this assertion is that in the administrative proceedings, the primary issue was whether Arbella -- not Point -- was violating CAR's rules, or otherwise engaging in unfair practices, in its attempt to determine whether Point's customers were perpetuating the fraud committed by Rapo & Jepsen in a particular segment of its customer base.4

The absence of such standards, Point argues, “left Arbella free to impose whatever requirements on Point customers that it chose to ․” This is an exaggeration. Even without specific rules governing Arbella's conduct, the statutory scheme invested DOI with authority to determine, at Point's request, whether Arbella's practices were “unfair or unreasonable or inconsistent with the provisions of [§ 113H],” and to order Arbella to discontinue any such practices. G. L. c. 175, § 113H (E), ninth & tenth pars. DOI and CAR, in fact, closely scrutinized Arbella's activities and, as discussed below, found no violations.

3. Application of CAR rules to Arbella's conduct. With respect to the merits of DOI's decision, Point argues that Arbella violated CAR rules by sending specially tailored and onerous renewal questionnaires to Point's commercial customers, which it did not send to any other exclusive producer's customers, and that DOI erred in concluding otherwise.

In its brief, Point does not identify any CAR rule that prohibited Arbella's conduct. Point instead relies on the “overarching mandate” of the CAR rules that policies in the residual market must be treated “in the exact same manner” as policies in the voluntary market, and that insurers must treat participants within the residual market “uniformly.” In this regard, CAR found, and DOI agreed, that nothing in CAR's rules of operation governing the commercial market required standardized renewal forms or questionnaires,5 that Arbella's conduct did not violate any specific or general requirements of equal treatment, and that Arbella's practices were not otherwise improper, unfair, or unreasonable.

Point further contends that any inquiries intended to determine whether Point's commercial customers in fact conducted legitimate business activities were contrary to CAR rules. Because those rules define a “private passenger motor vehicle” as one that is not owned by a business entity, Point argues that any vehicles owned by a corporation are, ispo facto, commercial vehicles. DOI likewise rejected this contention. DOI found ample evidence to support CAR's decision that “Arbella could refuse to issue or renew commercial policies that did not engage in a commercial purpose if it so chose.” DOI also found “Arbella's position that these questionnaires and forms are used to determine eligibility for a commercial policy and to evaluate the risks posed by drivers who are not properly licensed, engaging in fraud, or who are not commercial risks” to be “persuasive.”

Finally, Point argues that it was “persecuted” because Rapo & Jepsen's prior fraudulent conduct was effectively attributed to it. The record does not support Point's dramatic characterization of the prior proceedings. As Point, Arbella, CAR, DOI, and the Superior Court judge all recognized, the book of business that Point acquired from Rapo & Jepsen was potentially tainted by fraudulent activity, and Arbella was warranted in taking steps to ensure that this activity did not survive the change of ownership.6 As DOI and CAR concluded, the steps Arbella took to do so were reasonable and permitted by the governing rules.

“We give deference to the decision of an agency interpreting its own regulations.” Friends & Fishers of the Edgartown Great Pond, Inc. v. Department of Envtl. Protection, 446 Mass. 830, 837 (2006). DOI and CAR rejected Point's argument that the corporate form insulated its commercial customers from any scrutiny as to their eligibility for coverage. DOI and CAR further determined that Arbella's actions did not violate the governing statute and rules and were reasonable measures taken to address the possibility that the customers Point inherited from Rapo & Jepsen were not bona fide commercial customers. After a careful analysis of Point's claims, which underwent three levels of administrative review, we discern no basis to disturb these conclusions. DOI's and CAR's interpretations of the governing laws and rules were “reasonable and [their] findings are supported by substantial evidence.” Trust Ins. Co., 48 Mass. App. Ct. at 631. Point has not shown the agencies' decisions to be erroneous as a matter of law or procedure, “[a]rbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law.” G. L. c. 30A, § 14 (7) (g).

Judgment affirmed.


3.   The statute authorizes “[a]ny insurer or group of insurers participating in [the residual insurance market] and other person aggrieved ․ to bring a complaint to the commissioner [of insurance] alleging unfair or unreasonable or improper practices by any insurer, agent, or broker.” G. L. c. 175, § 113H (E), ninth par. DOI may hold a hearing or refer the matter to CAR to hold a hearing in the first instance. See Hanover Ins. Co. v. Commissioner of Ins., 443 Mass. 47, 50-51 & n.6 (2004). If DOI determines that an insurer's practices are “unfair or unreasonable or inconsistent with the provisions of [§ 113H, it] may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or inconsistent with the provisions of this section, and requiring the discontinuance of such activity or practice.” G. L. c. 175, § 113H (E), tenth par. “Under the statute, the commissioner is authorized to issue orders upon a meritorious complaint, but she is not compelled to do so.” Hanover Ins. Co., supra at 50. DOI's ultimate decision “shall be subject to review by appeal to the superior court department of the trial court of Suffolk county at the instance of any party in interest, which appeal shall be on the basis of the record of the proceeding before the commissioner.” G. L. c. 175, § 113H (E), eleventh par.

4.   To the extent Point's conduct was at issue, CAR rule of operation 14.B specifically required exclusive producers to refrain from engaging in fraud, to verify applicants' rating and licensing data, to notify the servicing carrier of any suspected fraud, and to provide only that coverage for which the applicant was eligible. In approving Arbella's termination of Rapo & Jepsen as an exclusive producer, CAR found that Rapo & Jepsen had violated these and other rules of operation. Point was clearly on notice of these standards of conduct.

5.   Point has wisely abandoned its argument, advanced in the administrative proceedings, that CAR rule of operation 30 dictated the content of forms and renewal questionnaires that Arbella could send to Point's customers. As DOI explained in its decision, that rule applied only to private passenger policies, whereas the rules with respect to commercial coverage then in effect allowed servicing carriers more flexibility.

6.   Point acknowledges that Arbella rightly established procedures to ensure that Point's new commercial customers were legitimate business entities, and that it acquiesced in, and even invited, such procedures. Point further argues, however, that it did not invite or acquiesce in the procedures Arbella initiated with respect to the renewal of existing customers. For the purposes of this decision, we accept Point's distinction. We need not rely on Point's acquiescence to affirm DOI's decision.

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